The Indian government, led by Prime Minister Narendra Modi, has approved Viability Gap Funding scheme worth Rs.7,453 crore (around $900 million) to support the development of offshore wind energy projects. This includes Rs.6,853 crore for installing and commissioning 1 gigawatt (GW) of offshore wind capacity, with 500 megawatts (MW) each off the coasts of Gujarat and Tamil Nadu. Additionally, Rs.600 crore will be allocated for upgrading two ports to handle the logistics requirements for these projects.
This Viability Gap Funding (VGF) scheme is a significant step towards implementing the National Offshore Wind Energy Policy of 2015, which aims to tap India’s vast offshore wind potential within its exclusive economic zone. The government’s financial support will reduce the cost of power from offshore wind projects, making them economically viable for purchase by power distribution companies (DISCOMs). While private developers will establish the projects through a transparent bidding process, the state-owned Power Grid Corporation of India Ltd (PGCIL) will construct the power evacuation infrastructure, including offshore substations. The Ministry of New and Renewable Energy will coordinate with various ministries and departments to ensure successful implementation.
Offshore wind energy offers several advantages over onshore wind and solar projects, such as higher reliability, lower storage requirements, and greater employment potential. Developing this sector will attract investments, foster local manufacturing capabilities, create jobs across the value chain, and drive technology development for offshore wind in India. It will also contribute to achieving the country’s energy transition targets.
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The successful commissioning of the 1 GW offshore wind projects is expected to generate approximately 3.72 billion units of renewable electricity annually, resulting in an annual reduction of 2.98 million tons of CO2 equivalent emissions over 25 years. Furthermore, this scheme will kick-start offshore wind energy development in India and lead to the creation of an ecosystem to support the initial 37 GW of offshore wind capacity, requiring an investment of around Rs.4,50,000 crore (around $54 billion).
